By: Anna Majavu
Small businesses are not one of the government’s “expenditure priorities” and were sidelined again in Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday. SMMEs received neither a mention nor additional funds from Godongwana, who only repeated that the government would use some money to merge the Small Enterprise Finance Agency, the Small Enterprise Development Agency, and the Co-operative Banks Development Agency—a plan that the Cabinet approved in 2021.
The budget downgraded state spending by R21 billion with additional funds prioritised for public sector wage increases and a one-year extension of the R350 monthly COVID-19 grant. A total of R1.6 billion was also being made available for disaster relief, including repairing flood damage in various provinces. Godongwana also spoke at length about the government’s aim of getting private companies to fund basic infrastructure.
Independent political analyst Dr Dale McKinley said the MTBPS had “ignored and sidelined SMMEs” in the budget for the past 20 years. “SMMEs are simply not taken very seriously as an economic driver, as a developmental driver in townships and rural areas, and this is consistent with the government’s preference for large scale businesses and big projects. SMMEs are not on the budgetary agenda of the ANC,” he added.
Saul Levin, who is the executive director of research institution TIPS, told Vutivi News that the MTBPS usually focussed on new, rather than existing programmes. “There is a lot to do to support SMEs that do not require budget, like procurement, or off-budget, such as bank or private sector finance,” he said. But Ubuntunomics owner and sustainability practitioner Sibusiso Nyathi told Vutivi News that the MTBPS was “basically an admission that the economy is in the intensive care unit”. “The situation is so dire that the government is budgeting for increased consumption spending in the form of meagre social grants as the last defence against societal breakdown,” he said.
Nyathi said that the Treasury is “desperately trying to lure private capital to invest in the construction of public assets, this means that there is no space for SMMEs to contribute, except for being peripheral players at the mercy of established business”. He added that most SMMEs made revenue from selling consumer products and service offerings, yet Godongwana had failed to say how the government would assist distressed consumers who were having to tighten their belts as the cost of living continued to rise.
Godongwana also repeated that the government was pushing forward with the Public Procurement Bill it introduced in June this year to create a single regulatory public procurement framework that strengthened the integrity of the procurement system, enhanced transparency and promoted transformation. But Nyathi said that because tenders were “shrouded in secrecy by nature because most contracts tend to be negotiated with the big companies, this can be described as a death knell to the vision of positioning SMMEs at the forefront of driving investment and growth… They simply do not have the financial resources to partner with government or to frontload infrastructure investments”.
SA Federation of Trade Unions (Saftu) spokesperson Trevor Shaku agreed that the government had “left SMMEs and co-operatives out of the MTBPS because the government is oriented towards big capital”. Big infrastructure projects to repair flood damage would mostly go to large companies that had the capital to invest in expensive equipment, he added. Shaku said the government had frequently stated that SMMEs were crucial in growing the economy, however, it continued to “only make verbal commitments without putting concrete steps in the direction of developing the SMME sector”. “Saftu sympathises with SMMEs in the context that they are strangled by big capital and are more or less suffering like the general working class. We call for a resuscitation of the underutilised manufacturing capacity under the democratic control of working-class co-operatives,” Shaku said.